Causes of the Cycle of poverty

Causes of the Cycle

Family Background

A 2002 research paper titled "The Changing Effect of Family Background on the Incomes of American Adults" analyzed changes in the determinants of family income between 1961 and 1999, focusing on the effect of parental education, occupational rank, income, marital status, family size, region of residence, race, and ethnicity. The paper
(1) outlines a simple framework for thinking about how family background affects children’s family and income,

(2) summarizes previous research on trends in intergenerational inheritance in the United States,

(3) describes the data used as a basis for the research which it describes,

(4) discusses trends in inequality among parents,

(5) describes how the effects of parental inequality changed between 1961 and 1999,

(6) contrasts effects at the top and bottom of the distribution, and

(7) discusses whether intergenerational correlations of zero would be desirable.

The paper concludes by posing the question of whether reducing the intergenerational correlation is an efficient strategy for reducing poverty or inequality. When improving the skills of disadvantaged children is relatively easy, it is an attractive strategy.

However, judging by American experience since the 1960s, improving the skills of disadvantaged children is far from easy. As a result, the paper suggests, there are probably cheaper and easier ways to reduce poverty and inequality, such as supplementing the wages of the poor or changing immigration policy so that it drives down the relative wages of skilled rather than unskilled workers. These alternative strategies would not reduce intergenerational correlations, but they would reduce the economic gap between children who started life with all the disadvantages instead of all the advantages.

Another paper, titled Do poor children become poor adults?, which was originally presented at a 2004 symposium on the future of children from disadvantaged families in France, and was later included in a 2006 collection of papers related to the theme of the dynamics of inequality and poverty, discusses generational income mobility in North America and Europe. The paper opens by observing that in the United States almost one half of children born to low income parents become low income adults, four in ten in the United Kingdom, and one-third in Canada.

The paper goes on to observe that rich children also tend to become rich adults — four in ten in the U.S. and the U.K., and as many as one-third in Canada. The paper argues, however, that money is not the only or even the most important factor influencing intergenerational income mobility and that the rewards to higher skilled and/or higher educated individuals in the labor market and the opportunities for children to obtain the required skills and credentials are two important factors; reaching the conclusion that income transfers to lower income individuals may be important to children in the here in now, but they should not be counted on to strongly promote generational mobility.


The paper recommends that governments focus on investments in children to ensure that they have both the skills and opportunities to succeed in the labor market, and observes that though this has historically meant promoting access to higher and higher levels of education, it is becoming increasingly important that attention be paid to preschool and early childhood education